July 21, 2011
The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. "As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world," said Sanders. "This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else."

Among the investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. "No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said.

The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse. In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.

For example, the CEO of JP Morgan Chase served on the New York Fed's board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed's emergency lending programs.

In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds. One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.

To Sanders, the conclusion is simple. "No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed's board of directors or be employed by the Fed," he said.
The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.

The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.

A more detailed GAO investigation into potential conflicts of interest at the Fed is due on Oct. 18, but Sanders said one thing already is abundantly clear. "The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street."

A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - Robert A. Heinlein - "Time Enough For Love"

I have a universal translator. A large bore rifle. It speaks louder than words and will translate you to the afterlife instantly. - Self

Aren't they unconstitutional in the first place.
So why have the powers that be let go on for this long.
I have contacted ever person in office that I could think of and have to this date not gotten anything in return.
So it's business as usual.

Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.
George Washington

Aren't they unconstitutional in the first place.
So why have the powers that be let go on for this long.
I have contacted ever person in office that I could think of and have to this date not gotten anything in return.
So it's business as usual.

Click to expand...

Yes, technically the Federal Reserve is Unconstitutional - in many ways. However, the Federal Reserve Act bypasses the Constitution because Congress voted the Act into being.

Whether or not Congress had the right to delegate it's Constitutionally appointed role to coin (and understood as "print") money is questionable. The very vote that passed the act into being in and of itself is questionable. Additionally the Federal Reserve Bank is a private institution serving private individuals, established to protect powerful financial interests, which prints bills of credit - Federal Reserve Notes are not backed by anything but the good faith that America's credit is good.

Here is a good site that encapsulates the viewpoints of the un-Constitutionality of the Federal Reserve Act/Bank.

"By failing to prepare you are preparing to fail."- Ben Franklin

A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - Robert A. Heinlein - "Time Enough For Love"

I have a universal translator. A large bore rifle. It speaks louder than words and will translate you to the afterlife instantly. - Self

A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects. - Robert A. Heinlein - "Time Enough For Love"

I have a universal translator. A large bore rifle. It speaks louder than words and will translate you to the afterlife instantly. - Self